Louisiana’s controversial film tax credit program would continue unaltered for another five years under legislation approved by a state Senate committee Thursday.
Though House Bill 562 must still clear several more legislative hurdles, the film industry appears to have fought off the latest attempts to rein in a program that costs taxpayers up to $150 million per year.
The Senate Revenue & Fiscal Affairs Committee on Thursday removed language from the bill, oppposed by the industry, that would have ended the practice of producers selling their tax credits back to the state for 90 cents on the dollar.
But the committee also changed a provision that would have extended the program for another decade, something the industry wanted. Instead, the program, which is scheduled to expire in 2025, would extend to 2030 under an amendment offered by Sen. Bret Allain, R-Franklin, the committee’s chairman.
Phasing out the buy-back provision “would have essentially killed the program,” Rep. Paula Davis, R-Baton Rouge, said in explaining afterward why she asked the committee to take it out.
She appeared before the panel on behalf of Speaker Clay Schexnayder, R-Gonzales, the bill’s sponsor.
A similar bill to extend the tax break two years ago failed in the House, but having the speaker sponsor it this year appears to be a strategic decision to scare away opponents.
With most tax credits, companies take the write-off on their state tax returns. But the companies that earn the film and movie tax credits typically don’t have enough of a liability in Louisiana to be able to do that. That’s why the film tax credit allows the 90% buy-back.
Supporters of the tax break say it brings jobs and investment to Louisiana. “Film = jobs,” read buttons worn by supporters of the tax credit at the Capitol.
Supporters also say the tax break brings tourists to Louisiana who want to visit places where movies were filmed.
But critics note that independent studies show taxpayers receive a poor return on their investment in the industry – as little as 22 cents for every dollar given away.
They also say that using the $150 million per year to hire teachers would be a better investment of taxpayer dollars.
“We give more away for film tax credits than we do to all the universities in north Louisiana,” Sen. Jay Morris, R-Monroe, said during a committee hearing on Tuesday, adding that it is “the worst kind of tax policy” because it can survive only with the government subsidy.
Critics in other parts of the state complain that most of the films and movies are shot in metro New Orleans.
After passage by the Revenue & Fiscal Affairs Committee, several steps remain for HB 562, but none appear insurmountable. HB 562 must win approval of the Senate Finance Committee and the full Senate. It must then return to the House to approve the changes adopted by the Senate committee. The House already approved the bill last week at Schexnayder’s behest.
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